Receiving shares as NRI from resident parents

As an OCI, you can receive shares of publicly listed Indian companies from your resident Indian parents without gift tax liability since gifts from parents are tax-exempt in India.

RBI Permission: Required if the transfer exceeds USD 50,000 annually or breaches sectoral limits.

Source of Funds: No restrictions if shares were lawfully acquired.

Repatriation: Sale proceeds must go to your NRO account, with repatriation capped at USD 1 million/year, subject to taxes.

For detailed, personalized advice, consider a phone consultancy.

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Under FEMA, RBI approval is subject to the following conditions:

a. the Donee is eligible to hold such a security under FDI Rules as amended from time to time

b. the gift does not exceed five percent of the paid-up capital of the Indian company 

c. the applicable sectoral cap in the Indian company is not breached

d. the Donor and the Donee shall be “relatives” within the meaning in clause (77) of section 2 of the Companies Act, 2013

e. the value of security to be transferred by the transferor together with any security transferred to any Non-Resident as gift during the financial year does not exceed the rupee equivalent of USD 50,000

Form FC-TRS will have to be filed within 60 days from the date of transfer of shares by way of gift. The onus of submission of the Form FC-TRS within the given timeframe would be on the Donor or Donee, resident in India.

For detailed discussion you may opt for phone consultation

Hello yes they can transfer you shares without any limitation if its listed company there is no need of additional RBI permission, for unlisted company there is mandatory requirement to take RBI Approval under FCTRS but on safer side will advise to execute gift deed which can act as reference

Additionally it will not have any tax implication in your hand as NRI since you are receiving gift in excess of Rs. 50,000/- from relative only

1. RBI Permission for Gifting Shares to an OCI

Under Indian laws, gifting of shares from Resident Indians (your parents) to an OCI does not require prior RBI approval if the following conditions are met:

• The shares are of publicly listed Indian companies traded on a recognized stock exchange such as NSE.
• The gifting transaction complies with the Foreign Exchange Management Act (FEMA) regulations.
• The gift is done without any consideration (i.e., no monetary exchange).

However, it is essential to:

• 
  File Form FC-TRS (Foreign Currency Transfer of Shares) with the authorized dealer bank to report the transaction within 60 days of the gifting.
• Ensure compliance with FEMA guidelines by keeping records of the transaction.

2. Amount Limits and Source of Funds

• There is no specific cap on the value of shares that can be gifted by parents to their child, provided it complies with FEMA rules.
• The source of funds used by your parents to originally purchase the shares is not scrutinized during the gifting process, as long as the shares are legally acquired.
• Your parents should maintain proper documentation of the gift for record-keeping and audit purposes.

3. Gift Tax Implications

For the Recipient (You):

• Under the Income Tax Act, 1961, gifts received by an individual are exempt from tax if they are received from a relative, which includes parents.
• Therefore, you will not incur any gift tax on receiving the shares from your parents.

For the Donor (Your Parents):

• There is no gift tax for the donor in India.
• However, if the shares generate income (e.g., dividends or capital gains after the transfer), you will be responsible for reporting and paying taxes on that income as per Indian tax laws applicable to OCIs.

4. Tax Implications on Sale of Shares

If you sell the shares in the future, the following tax implications will apply:

• 
  Long-Term Capital Gains (LTCG): If shares are held for more than 1 year, LTCG exceeding ₹1 lakh will be taxed at 10% without indexation.
• 
  Short-Term Capital Gains (STCG): If shares are held for 1 year or less, STCG is taxed at 15%.

5. Documentation Required

To ensure a smooth process, the following documents should be prepared:

1. 
   Gift Deed: A legal gift deed should be executed, clearly mentioning the details of the shares gifted and confirming that the transfer is without consideration.
2. 
   KYC of Both Parties: Ensure that the KYC details of both your parents and you (OCI holder) are updated.
3. 
   Filing of FC-TRS: As mentioned, this is mandatory under FEMA.

Summary:

1. 
   RBI Permission: Not required, but FEMA compliance and Form FC-TRS filing are mandatory.
2. 
   Gift Tax: None, since the transfer is between relatives.
3. 
   Amount Limits: No specific limit, but proper documentation is essential.
4. 
   Future Tax: You will be responsible for taxes on income (dividends, capital gains) arising from the gifted shares.